February 2014 Board Book by New Mexico Retiree Healthcare Authority

(PLEASE FIND THE AGENDA/TABLE OF CONTENTS ON PAGE 5.)

REGULAR MEETING OF THE BOARD OF DIRECTORS February 4, 2014 9:30 AM NMRHCA Board Room 2nd Floor Suite 207 4308 Carlisle Blvd. NE Albuquerque, New Mexico

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New Mexico Retiree Health Care Authority Regular Meeting BOARD OF DIRECTORS

ROLL CALL February 4, 2014

Member in Attendance Mr. Sullivan, President Mr. Monta単o, Vice President Mr. Crandall, Secretary Mr. Propst Ms. Goodwin Mr. Johnson Mr. Linton Ms. Padilla-Jackson Ms. Sucher Ms. Hill

NMRHCA BOARD OF DIRECTORS February 2014 Mr. Julian Baca Designee of PERA Executive Director 33 Plaza La Prensa Santa Fe, NM 87507 PO Box 2123 Santa Fe, NM 87504-2123 julian.baca@state.nm.us Ms. Jan Goodwin, Executive Director Educational Retirement Board PO Box 26129 Santa Fe, NM 87502-0129 jan.goodwin@state.nm.us; (W) 505-827-8030 (F) 505-827-1855 The Honorable Mr. Wayne Johnson NM Association of Counties Bernalillo County Commissioner One Civic Plaza, NW Albuquerque, NM 87102 Ms. Karen Brown Deputy County Commissioner Bernalillo County, District 5 kbrown@bernco.gov; 505-468-7212 (office) 505-462-9821 (fax) The Honorable Mr. James B Lewis NM State Treasurer 2055 South Pacheco Street Suite 100 & 200 Santa Fe, NM 87505-5135 jamesb.lewis@state.nm.us (W) 505-955-1120 (Fax) 505-955-1195 Mr. Terry Linton Governor’s Appointee 1204 Central Ave. SW Albuquerque, NM 87102 terry@lintonandassociates.com; 505-247-1530

Ms. Olivia Padilla-Jackson NM Municipal League Deputy Finance Director City of Albuquerque Mr. Wayne Propst Executive Director Public Employees Retirement Association 33 Plaza La Prensa Santa Fe, NM 87507 PO Box 2123 Santa Fe, NM 87504-2123 Wayne.Propst@state.nm.us; W: (505) 476-9301 Ms. Marilyn Hill Deputy State Treasurer Designee of NM State Treasurer Marilyn.Hill@state.nm.us 505-955-1123 Ms. Karen Sucher NEA-NM, Classroom Teachers Assoc., & NM Federation of Educational Employees PO BOX 1983 Tijeras, NM 87059 smithsucher3@aol.com Phone: 505-286-8702 Mr. Tom Sullivan, President Superintendents’ Association of NM 800 Kiva Dr. SE Albuquerque, NM 87123 tlsullivan48@gmail.com; 505-330-2600 Mr. Doug Crandall, Secretary Retired Public Employees of New Mexico PO Box 20607 Albuquerque, NM 87154-0607

Mr. Joe Montaño, Vice President NM Assoc. of Educational Retirees 5304 Hattiesburg NW Albuquerque, NM 87120 Jmountainman1939@msn.com (H) 897-9518 4

Regular Meeting of the NEW MEXICO RETIREE HEALTH CARE AUTHORITY BOARD OF DIRECTORS February 4, 2014 9:30 AM NMRHCA Board Room 2nd Floor, Suite 207 4308 Carlisle Blvd. NE Albuquerque, NM 87107

AGENDA Call to Order

Mr. Sullivan, Chair

Roll Call to Ascertain Quorum

Ms. Beatty, Recorder

Pledge of Allegiance

Mr. Sullivan, Chair

Approval of Agenda

Mr. Sullivan, Chair

Approval of Regular Meeting Minutes December 3, 2013

Mr. Sullivan, Chair

Public Forum and Introductions

Mr. Sullivan, Chair

Executive Directorâ&#x20AC;&#x2122;s Update

Mr. Tyndall, Executive Director

1. 2. 3. 4. 5.

Blue Cross Blue Shield Purchase of Lovelace Health Plan Pharmacy Benefit Manager Request for Proposal House Bill 27/Senate Bill 135 Joint House Education Committee/Senate Education Committee Presentation House Appropriations and Finance Committee Action

Presbyterian Health Plan - Member Engagement Treatment Cost Calculator

Ms. Weber, Program Specialist Ms. De La O, E-Business Coordinator

Blue Cross Blue Shield Integrated Provider Finder/Cost Estimator

Ms. Bell, Account Executive

Second Quarter Budget Review

Mr. Archuleta, Deputy Director

Date & Location of the next Regular Board Meeting

Mr. Sullivan, Chair

March 4, 2014, 9:30 AM, NMRHCA Board Room, 2nd Floor Suite 207, 4308 Carlisle Blvd. NE, Albuquerque, New Mexico. Other Business

Mr. Sullivan, Chair

Adjourn

ACTION SUMMARY RETIREE HEALTH CARE AUTHORITY/REGULAR BOARD MEETING December 3, 2013 Item

Action

Page #

APPROVAL OF AGENDA APPROVAL OF MINUTES: November 5, 2013 PUBLIC FORUM & INTRODUCTIONS EXECUTIVE DIRECTOR’S UPDATE BCBSNM Purchase of Lovelace Health Plan Switch Enrollment Update IBAC Program Evaluation 2014 Proposed Legislation SIC Investment Update Legislative Finance Committee – FY15 Appropriation Request BUDGET ADJUSTMENT REQUEST OTHER BUSINESS [none] DATE AND LOCATION OF NEXT MTG: February 4, 2014, Albuquerque EXECUTIVE SESSION

Approved

Informational

Approved

No action

MINUTES OF THE NM RETIREE HEALTH CARE AUTHORITY/BOARD OF DIRECTORS REGULAR MEETING December 3, 2013 CALL TO ORDER A Regular Meeting of the Board of Directors of the New Mexico Retiree Health Care Authority was called to order on this date at 9:30 a.m. in the NMRHCA Board Room, 4308 Carlisle Boulevard, N.E., Albuquerque, New Mexico. ROLL CALL TO ASCERTAIN QUORUM A quorum was present: Members Present: Mr. Tom Sullivan, President Mr. Joe Montaño, Vice President Mr. Doug Crandall, Secretary Ms. Jan Goodwin Ms. Marilyn Hill [designee of the Honorable James B. Lewis, NM State Treasurer] Mr. Terry Linton Mr. Wayne Propst Ms. Karen Sucher Members Excused: Mr. Wayne Johnson Ms. Olivia Padilla‐Jackson Staff Present: Mr. Mark Tyndall, Executive Director Mr. David Archuleta, Deputy Director Ms. Deb Vering, Chief Financial Officer Mr. Tomas Rodriguez, IT Director Ms. Judith S. Beatty, Recorder Mr. Rudy Bantista, Communications & Board Recording Secretary Others Present: [See sign‐in sheet.] PLEDGE OF ALLEGIANCE Mr. Archuleta led the pledge.

New Mexico Retiree Health Care Authority: December 3, 2013

APPROVAL OF AGENDA Mr. Crandall moved for approval of the agenda, as published. Ms. Goodwin seconded the motion, which passed unanimously by voice vote. APPROVAL OF ANNUAL MEETING MINUTES: November 5, 2013 Mr. Montaño moved approval of the November 5, 2013, minutes, as submitted. Mr. Crandall seconded the motion, which passed unanimously by voice vote. PUBLIC FORUM AND INTRODUCTIONS Audience members introduced themselves. There were no speakers. EXECUTIVE DIRECTOR’S UPDATE 1. Blue Cross Blue Shield Purchase of Lovelace Health Plan Mr. Tyndall stated that Blue Cross Blue Shield of New Mexico (BCBSNM) and Lovelace Health Plan have come to an arrangement whereby Blue Cross Blue Shield will be purchasing the Medicare Advantage and commercial membership from Lovelace Health Plan. NMRHCA has about 5,000 Lovelace members on its Medicare Advantage plan; however, CMS has not yet approved the movement of the membership to BCBSNM. He said NMRHCA will continue providing services to the Lovelace Medicare Advantage members until approval is given. Mr. Tyndall noted that Albuquerque Health Partners is now part of the Lovelace network, effective immediately. Mr. Tyndall asked for assurances from BCBSNM representative Lori Bell and Lovelace representative Bill Mascolo that they will do everything possible to ensure a smooth and problem‐ free transition for NMRHCA members affected by this move. Ms. Bell stated that BCBSNM has a large internal task force that is working with key Lovelace personnel to see that the transition, scheduled on January 1, 2014, is as seamless as possible. Mr. Mascolo said two large groups (Lovelace and the federal government programs) in the Medicare line of business will be moving over on January 1; and through the first quarter (no later than April 1), they will be migrating all of the commercial groups, including the IBAC. He said he anticipates final approvals to come through in two to three weeks and will keep the NMRHCA informed.

New Mexico Retiree Health Care Authority: December 3, 2013

2. Switch Enrollment Update Mr. Tyndall noted the following highlights: ‐‐ About 200 members, or about 3% of Premier Plus members, moved from Premier Plus to Premier. The migration trend continues, but is slowing. At this point about two‐thirds of the members are on Premier and one‐third are on Premier Plus. ‐‐ Because the individual risk pools are stabilizing, there may be a discussion at the annual meeting about having rating differentials for the two risk pools. ‐‐ Main action in this year’s switch enrollment was on the Medicare side. • New United Health Care will pick up about 700 members. Total cost savings should equal about $900,000 depending on risk of members who moved from the higher cost plan. • Presbyterian’s new statewide offering picks up about 300 new members, an 8 percent increase. • Lovelace plans lost 330 members. They are expected to transition to BCBSNM. ‐‐ NMRHCA met in 16 meetings with more than 3,000 members across the state in 14 different communities, and was able to do 600 biometric screenings and 700 immunizations. 3. IBAC Program Evaluation Mr. Tyndall stated that a presentation was made to the Legislative Finance Committee (LFC) by its Program Evaluation Team on November 22, when the Team reported that they didn’t feel IBAC had done a good job in controlling costs with respect to provider reimbursements, among other findings. Mr. Tyndall stated that NMRHCA accepted the findings and made comments, which he summarized for the Board. Key findings ‐‐ “Lack of effective oversight of provider rates and quality improvement has made employee health care less affordable.” Mr. Tyndall said NMRHCA agreed that the industry as a whole needs to evolve beyond the traditional fee‐for‐service reimbursement system. In fact, as part of the last procurement process, the IBAC specifically made sure it had points assignments to the health plans that were showing the most progress in evolving away from the fee‐for‐service model. There has also been some progress with the health plans in the hospitals in getting bundled payments for ER and outpatient surgery services. IBAC has met directly with ABQ Health Partners and Presbyterian Medical Group and is working toward developing some value‐based reimbursement models.

New Mexico Retiree Health Care Authority: December 3, 2013

‐‐ “Health care spending for IBAC agencies has continued to rise at unsustainable levels.” Mr. Tyndall said NMRHCA’s response was that spending on a per‐member basis in FY2009 was about $417 a month, and is projected at $418 per month in FY2014, so has been flat for five years. NMRHCA acknowledged that some of the reasons for that are the changes the agency has made to the plans, with higher deductibles and out‐of‐pocket expenses. Key recommendations ‐‐ “Require the NMRHCA to participate in the joint purchase of health care and ancillary services with the consolidated health care finance entity.” Mr. Tyndall said a main recommendation was that the benefits of Albuquerque Public Schools, the Public School Insurance Authority and the state’s Risk Management Division be consolidated into a newly created healthcare agency. While NMRHCA was not included in that particular recommendation, it was recommended that NMRHCA be required to participate with that consolidated healthcare finance entity. He said NMRHCA would welcome that prospect. ‐‐ “Actively participate in provider rate development by establishing acceptable rates for state‐ sponsored programs, allowing no rate changes without state approval….” Mr. Tyndall said NMRHCA will continue to work through its health plan partners, as well as directly with health care delivery systems, to improve efficiencies. As Medicaid, Medicare and commercial payers all look to limit or reduce their reimbursements, it is important that the combination be managed in a manner that does not worsen the existing provider shortage in the state. 4. 2014 Proposed Legislation Mr. Tyndall said staff met with LFC Chairman Varela about NMRHCA’s 2014 proposed legislation to increase the employer and employee contribution rates, and Chairman Varela recommended an alternative scenario that would spread the employee increase over a 6‐year period at .125 percent rather than .25 percent per year. The NMRHCA had originally suggested phasing in the employee increase of .75 percent over 3 years, and phasing in the employer piece of 1.5 percent over 6 years. Mr. Tyndall reviewed a graph reflecting how the employer and employee contribution increases would affect solvency in each of the 6 years. He stressed that these solvency gains are strictly the result of the contribution increases, however, and do not include other elements of the Five Year Plan. Mr. Tyndall noted that other major components of the Five Year Strategic Plan were: ‐‐ Phase out “family coverage” subsidies for retirees with multiple dependent children ‐‐ Increase cost sharing on prescription coverage (stabilize plan/member share percentage) ‐‐ ‐Increase sharing of pre‐Medicare plans

New Mexico Retiree Health Care Authority: December 3, 2013

    

Implement graduated minimum age requirement (to receive subsidies) Increase years of service required to receive maximum subsidy Reduce pre‐Medicare retiree subsidies Reduce pre‐Medicare spousal subsidies Implement enhanced wellness programs

‐‐ All elements of the strategic plan combined would extend the solvency of the program from 2029 through 2043 and more closely align benefits with contributions over the life of the program. Board members discussed strategic options. Ms. Goodwin stated that the Board should continue looking at wellness issues, as this is the one mechanism the NMRHCA has in actually bending the cost curve and adding years of solvency to the plan. Mayo Clinic has found that a $100 gift certificate gets about 75 percent compliance in getting a health risk assessment, and a $240 a year premium reduction results in about 87 percent compliance. She commented that obviously getting the health risk assessment is only the first step, because then people have to become engaged in managing their chronic diseases, etc. Mr. Linton agreed with Ms. Goodwin’s comments He said he would like to see a major push in this direction, and suggested that staff prepare recommendations for Board review in the near future. He pointed out that enhanced wellness programs are part of the NMRHCA Five Year Strategic Plan. Mr. Tyndall agreed to present a report in the spring with recommendations that could be considered at the annual meeting in July. He added that there are strong arguments both for and against wellness programs with studies to back up both points of view. Mr. Propst commented that what bends the cost curve are employer‐employee contributions and minimum retirement ages, and not employee wellness programs. He added that the Board has to take into consideration what kind of physical shape the population is when it enters the program and whether those people the state sends into the program are healthy and eating right. He commented that clearly they are not. He said this is not to say the NMRHCA shouldn’t implement wellness programs, but it has to do things outside of that if it wants to make a difference. Mr. Propst said he has long advocated the idea of having a nurse in the office downstairs who is available to the members whenever they walk in and can discuss their medications with them and other health maintenance matters. Ms. Goodwin agreed that a health risk assessment on its own is worthless if it is not accompanied by clinical biometric screenings to identify health conditions that can then be managed in conjunction with health professionals such as nurses, coaches, or health educators. Mr. Montaño said the NMRHCA already has a wellness program, and he would be interested in knowing what percentage of members take advantage of the free screenings and other free benefits offered.

New Mexico Retiree Health Care Authority: December 3, 2013

Ms. Sucher noted that APS employees were required to have the biometric screening this year, and any smokers had to pay a higher rate. Mr. Tyndall noted that the Board previously voted against the idea of a smoker’s differential. Chairman Sullivan said Ms. Goodwin seemed to be suggesting a two‐tiered incentive, one for the assessment and one for follow‐up. He said he would like to know what the cost would be and how that cost could be offset with premiums. Ms. Goodwin suggested that any discussion include moving away from the fee‐for‐service model and into paying for outcomes. Chairman Sullivan suggested an in‐depth discussion in advance of the July annual meeting. Board members discussed holding a special meeting and having the Executive Committee work with Messrs. Tyndall and Archuleta to schedule a date. 5. SIC Investment Update ‐‐ As of October 31, the NMRHCA fund balance was $321,659,043. ‐‐ The SIC will potentially vote in December to allow the NMRHCA to participate in some alternative investment pools. The Council Investment Council unanimously endorsed a proposal to allow the NMRHCA to invest in all of the alternative investment classes. Once the final decision is known, NEPC will make a presentation to the NMRHCA Board on its asset allocation mix. 6. Legislative Finance Committee – FY15 Appropriation Request Mr. Tyndall reviewed the FY15 Appropriation Request presented to the Legislative Finance Committee on November 22, 3013. BUDGET ADJUSTMENT REQUEST Mr. Archuleta asked for Board approval to submit a Budget Adjustment Request to DFA and Legislative Finance Committee totaling $166,000, broken down as follows: an $83,000 increase from the Health Benefits Administration Fund as a transfer to Program Support, comprised of a $39,100 increase in Personal Services and Employee Benefits and a $43,900 increase in Other Costs. Mr. Crandall moved approval of the BAR, as presented. Mr. Propst seconded the motion, which passed unanimously by voice vote. DATE & LOCATION OF THE NEXT REGULAR BOARD MEETING: FEBRUARY 4, 2014, 9:30 A.M., NMRHCA BOARD ROOM, 2ND FLOOR, SUITE 207, 4308 CARLISLE BLVD, N.E., ALBUQUERQUE, NEW MEXICO

New Mexico Retiree Health Care Authority: December 3, 2013

OTHER BUSINESS None. EXECUTIVE SESSION PURSUANT TO AUDIT ACT, §12‐6‐5 NMSA 1978 Mr. Crandall moved to enter Executive Session for the purpose of discussing matters related to the Audit Act, as permitted by the Open Meetings Act. Mr. Montaño seconded the motion, which passed on the following roll call vote: For: Chairman Sullivan; Mr. Montaño; Mr. Crandall; Ms. Goodwin; Ms. Hill; Mr. Linton; Mr. Propst; Ms. Sucher. Against: None. [Executive Session: 10:50 a.m. – 11:10 a.m.] Chairman Sullivan reported that no matters were discussed in Executive Session other than what was stated on the agenda. ADJOURN Its business completed, the Board adjourned the meeting at 11:10 a.m. Tom Sullivan, President Doug Crandall, Secretary

New Mexico Retiree Health Care Authority: December 3, 2013

Susana Martinez Governor Edwynn L. Burckle Secretary

State of New Mexico

Lawrence O. Maxwell State Purchasing Agent

GENERAL SERVICES DEPARTMENT PURCHASING DIVISION 1100 St. Francis Dr. Rm. 2016 • Santa Fe, New Mexico 87505 Mailing Address: P.O. Box 6850 • Santa Fe, New Mexico 87502 Phone (505) 827-0472 • Fax: (505) 827-2484

Administrative Services Division (505) 827-2000 Facilities Management Division (505) 827-2141 State Purchasing Division (505) 827-0472 Risk Management Division (505) 827-0442 State Printing & Graphic Services Bureau (505) 476-1950 Transportation Services Division (505) 827-1958

-NOTICERequest for Proposal Number: TITLE: Pharmaceutical Benefits Management Services COMMODITY CODES: 07020, 07040, 15602, 15614, 15620, 15624, 17030, 17402, 23226 PURPOSE: To secure PBM services for the IBAC. The PBM services include processing and paying prescription claims, developing and maintaining a formulary, contracting with pharmacies/providers and rebates with drug manufacturers, as well as the normal customer service functions of any customer service organization. GENERAL INFORMATION: All questions about the contents of the RFP document shall be directed to: RFP Administrator: (“Procurement Manager’s “Designee”) Correspondence should be directed to: Christy Edwards, Procurement Manager Deputy Director, NM Public Schools Insurance Authority 410 Old Taos Highway Santa Fe, NM 87501 christy.edwards@state.nm.us

ISSUANCE: The Request for Proposals will be issued on January 24, 2014. Firms interested in obtaining a copy may access and download the document from the Internet on at the following address: http://www.generalservices.state.nm.us/statepurchasing/ITBs__RFPs_and_Bid_Tabulation.aspx

PRE-PROPOSAL CONFERENCE: Not Applicable PROPOSAL DUE DATE AND TIME: Proposals must be received by the Procurement Manager no later than 3:00 p.m. MST, February 18, 2014.

Proposals received after the due date and time will not be accepted. Rev.12.2013

January 21, 2014

HOUSE BILL 27

1 2

51ST LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2014

INTRODUCED BY

Jim R. Trujillo

5 6 7 8

ENDORSED BY THE INVESTMENTS AND PENSIONS OVERSIGHT COMMITTEE

9 10

AN ACT

RELATING TO HEALTH CARE; AMENDING THE RETIREE HEALTH CARE ACT

BY INCREASING THE EMPLOYER AND EMPLOYEE CONTRIBUTION RATES PAID

TO THE RETIREE HEALTH CARE FUND; RECONCILING MULTIPLE

AMENDMENTS TO THE SAME SECTION OF LAW BY REPEALING LAWS 2009,

CHAPTER 287, SECTION 2.

underscored material = new [bracketed material] = delete

16 17 18

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: SECTION 1.

Section 10-7C-15 NMSA 1978 (being Laws 1990,

Chapter 6, Section 15, as amended by Laws 2009, Chapter 287,

Section 2 and by Laws 2009, Chapter 288, Section 3) is amended

to read:

22 23

"10-7C-15. A.

RETIREE HEALTH CARE FUND CONTRIBUTIONS.--

Following completion of the preliminary

contribution period, each participating employer shall make

contributions to the fund pursuant to the following provisions: .194926.4SA

(1)

1 2

members of an enhanced retirement plan, the employer's

contribution shall equal:

(a)

one and three-tenths percent of each

participating employee's salary for the period from July 1,

2002 through June 30, 2010; (b)

one and six hundred sixty-six

thousandths percent of each participating employee's salary for

the period from July 1, 2010 through June 30, 2011; (c)

one and eight hundred thirty-four

thousandths percent of each participating employee's salary for

the period from July 1, 2011 through June 30, 2012; [and] (d)

two percent of each participating

employee's salary [beginning] from July 1, 2012 through June

30, 2014; (e)

16 underscored material = new [bracketed material] = delete

for participating employees who are not

two and twenty-five hundredths

percent of each participating employee's salary from July 1,

2014 through June 30, 2015; (f)

two and one-half percent of each

participating employee's salary from July 1, 2015 through June

30, 2016; (g)

two and seventy-five hundredths

percent of each participating employee's salary from July 1,

2016 through June 30, 2017; (h)

three percent of each participating

.194926.4SA - 2 -

employee's salary from July 1, 2017 through June 30, 2018; (i)

2 3

percent of each participating employee's salary from July 1,

2018 through June 30, 2019; and (j)

5 6

three and one-half percent of each

participating employee's salary on and after July 1, 2019; (2)

for participating employees who are

members of an enhanced retirement plan, the employer's

contribution shall equal:

(a)

one and three-tenths percent of each

participating employee's salary for the period from July 1,

2002 through June 30, 2010; (b)

two and eighty-four thousandths

percent of each participating employee's salary for the period

from July 1, 2010 through June 30, 2011; (c)

16 underscored material = new [bracketed material] = delete

three and twenty-five hundredths

two and two hundred ninety-two

thousandths percent of each participating employee's salary for

the period from July 1, 2011 through June 30, 2012; [and] (d)

two and one-half percent of each

participating employee's salary [beginning July 1, 2012; and]

from July 1, 2012 through June 30, 2014; (e)

two and eight hundred thirteen

thousandths percent of each participating employee's salary

from July 1, 2014 through June 30, 2015; (f)

three and one hundred twenty-five

.194926.4SA - 3 -

thousandths percent of each participating employee's salary

from July 1, 2015 through June 30, 2016; (g)

3 4

thousandths percent of each participating employee's salary

from July 1, 2016 through June 30, 2017; (h)

three and seventy-five hundredths

percent of each participating employee's salary from July 1,

2017 through June 30, 2018; (i)

four and sixty-three thousandths

percent of each participating employee's salary from July 1,

2018 through June 30, 2019; and (j)

four and three hundred seventy-five

thousandths percent of each participating employee's salary on

and after July 1, 2019; and (3)

underscored material = new [bracketed material] = delete

three and four hundred thirty-eight

each employer that chooses to become a

participating employer after January 1, 1998 shall make

contributions to the fund in the amount determined to be

appropriate by the board.

Following completion of the preliminary

contribution period, each participating employee, as a

condition of employment, shall contribute to the fund pursuant

to the following provisions: (1)

for a participating employee who is not a

member of an enhanced retirement plan, the employee's

contribution shall equal: .194926.4SA - 4 -

(a)

1 2

of the employee's salary for the period from July 1, 2002

through June 30, 2010; (b)

eight hundred thirty-three

thousandths of one percent of the employee's salary for the

period from July 1, 2010 through June 30, 2011;

(c)

nine hundred seventeen thousandths

of one percent of the employee's salary for the period from

July 1, 2011 through June 30, 2012; [and] (d)

10 11

one percent of the employee's salary

[beginning] from July 1, 2012 through June 30, 2014; (e)

one and one hundred twenty-five

thousandths percent of the employee's salary from July 1, 2014

through June 30, 2015; (f)

underscored material = new [bracketed material] = delete

sixty-five hundredths of one percent

one and twenty-five hundredths

percent of the employee's salary from July 1, 2015 through June

30, 2016; (g)

one and three hundred seventy-five

thousandths percent of the employee's salary from July 1, 2016

through June 30, 2017; (h)

21 22

one and one-half percent of the

employee's salary from July 1, 2017 through June 30, 2018; (i)

one and six hundred twenty-five

thousandths percent of the employee's salary from July 1, 2018

through June 30, 2019; and .194926.4SA - 5 -

(j)

1 2

percent of the employee's salary on and after July 1, 2019; (2)

for a participating employee who is a

member of an enhanced retirement plan, the employee's

contribution shall equal:

(a)

sixty-five hundredths of one percent

of the employee's salary for the period from July 1, 2002

through June 30, 2010; (b)

one and forty-two thousandths

percent of the employee's salary for the period from July 1,

2010 through June 30, 2011; (c)

one and one hundred forty-six

thousandths percent of the employee's salary from July 1, 2011

through June 30, 2012; [and] (d)

underscored material = new [bracketed material] = delete

one and seventy-five hundredths

one and one-fourth percent of the

employee's salary [beginning July 1, 2012; and] from July 1,

2012 through June 30, 2014; (e)

one and four hundred six thousandths

percent of the employee's salary from July 1, 2014 through June

30, 2015; (f)

one and five hundred sixty-three

thousandths percent of the employee's salary from July 1, 2015

through June 30, 2016; (g)

24 25

one and seven hundred nineteen

thousandths percent of the employee's salary from July 1, 2016 .194926.4SA - 6 -

through June 30, 2017; (h)

2 3

thousandths percent of the employee's salary from July 1, 2017

through June 30, 2018; (i)

two and thirty-one thousandths

percent of the employee's salary from July 1, 2018 through June

30, 2019; and (j)

8 9 10

two and one hundred eighty-eight

thousandths percent of the employee's salary on and after July 1, 2019; and (3)

underscored material = new [bracketed material] = delete

one and eight hundred seventy-five

as a condition of employment, each

participating employee of an employer that chooses to become a

participating employer after January 1, 1998 shall contribute

to the fund an amount that is determined to be appropriate by

the board.

the contribution from the participating employee's salary and

shall remit it to the board as provided by any procedures that

the board may require.

Each month, participating employers shall deduct

On or after July 1, 2009, no person who has

obtained service credit pursuant to Subsection B of Section

10-11-6 NMSA 1978, Section 10-11-7 NMSA 1978 or Paragraph (3)

or (4) of Subsection A of Section 22-11-34 NMSA 1978 may enroll

with the authority unless the person makes a contribution to

the fund equal to the full actuarial present value of the

amount of the increase in the person's health care benefit, as .194926.4SA - 7 -

1 2

Except for contributions made pursuant to

Subsection C of this section, a participating employer that

fails to remit before the tenth day after the last day of the

month all employer and employee deposits required by the

Retiree Health Care Act to be remitted by the employer for the

month shall pay to the fund, in addition to the deposits,

interest on the unpaid amounts at the rate of six percent per

year compounded monthly.

Except for contributions made pursuant to

Subsection C of this section, the employer and employee

contributions shall be paid in monthly installments based on

the percent of payroll certified by the employer.

underscored material = new [bracketed material] = delete

determined by the authority.

Except in the case of erroneously made

contributions or as may be otherwise provided in Subsection D

of Section 10-7C-9 NMSA 1978, contributions from participating

employers and participating employees shall become the property

of the fund on receipt by the board and shall not be refunded

under any circumstances, including termination of employment or

termination of the participating employer's operation or

participation in the Retiree Health Care Act.

Notwithstanding any other provision in the

Retiree Health Care Act and at the first session of the

legislature following July 1, 2013, the legislature shall

review and adjust the distributions pursuant to Section 7-1-6.1 .194926.4SA - 8 -

NMSA 1978 and the employer and employee contributions to the

authority in order to ensure the actuarial soundness of the

benefits provided under the Retiree Health Care Act.

As used in this section, "member of an enhanced

retirement plan" means: (1)

6 7

retirement association who, pursuant to the Public Employees

Retirement Act, is included in: (a)

9 10

coverage plan 1; or

(2)

19 20 21 22

municipal police member coverage

(c)

municipal fire member coverage plan

(d)

municipal detention officer member

3, 4 or 5; or

(b) plan 3, 4 or 5;

13 14

state police member and adult

correctional officer member coverage plan 1;

underscored material = new [bracketed material] = delete

a member of the public employees

a member pursuant to the provisions of the

Judicial Retirement Act." SECTION 2.

REPEAL.--Laws 2009, Chapter 287, Section 2 is

repealed. SECTION 3.

EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2014. - 9 -

23 24 25 .194926.4SA

House Bill 27 House Bill 27 House Bill 27 amends the Retiree Health Care Act by increasing the employer and employee contribution rates paid to the Retiree Health Care Fund. The employee increase will begin in FY15 from its current level of 1 percent to 1.75 percent over a 6 year period (FY15 – FY20). The employer increase will begin in FY15 from its current level of 2 percent to 3.5 percent over the same time frame (FY15 – FY20).

A B C Fiscal Year Employee Increase FY14 1.00% NA FY15 1.125% 0.125% FY16 1.250% 0.125% FY17 1.375% 0.125% FY18 1.500% 0.125% FY19 1.625% 0.125% FY20 1.750% 0.125%

D Employer 2.000% 2.250% 2.500% 2.750% 3.000% 3.250% 3.500%

E Increase NA 0.250% 0.250% 0.250% 0.250% 0.250% 0.250%

F GF Impact NA $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000

G Total 3.000% 3.375% 3.750% 4.125% 4.500% 4.875% 5.250%

H RHCA Revenue NA $15,000,000 $30,000,000 $45,000,000 $60,000,000 $75,000,000 $90,000,000

Purpose of Legislation Provisions within House Bill 27 combined with NMRHCA’s Five Year Strategic Plan will extended the solvency of the program from current estimates of 2029 through 2043. This request supports the purpose of the Retiree Health Care Act “to provide comprehensive core group health insurance for persons who have retired from certain public service in New Mexico.” Background Laws 2009, Chapters 287 (House Bill 351 ‐ Varela) and 288 (House Bill 573 ‐ Heaton) provided the New Mexico Retiree Health Care (NMRHCA) program with a graduated employee/employer contribution increase (1.95 percent to 3 percent of payroll) beginning in FY11 and concluding in FY13. In addition, Chapter 288 includes the following section: “...At the first session of the legislature following July 1, 2013, the legislature shall review and adjust the distributions pursuant to Section 7‐1‐6.1 NMSA 1978 and the employer and employee contributions to the authority in order to ensure the actuarial soundness of the benefits provided under the Retiree Health Care Act” (10‐7C‐15‐G). Past, Present, Future Projections

Medical Membership Assets Unfunded Liability Projected Insolvency

2009 40,224 $122 million $4.1 billion 2014

2014 51,484 $340 million $3.6 billion 2029

* ** *** ****

2015 w/HB27 71,265 $3.4 billion $2.2 billion 2043

*Projected membership in 2025 based on historical growth of 3 percent per year **Invested assets is projected to reach its peak in 2034 ***Assuming current medical trend of 8 percent annually **** Based on above mentioned assumptions

Fiscal Implications Upon full implementation in FY20 an additional $90 million per year will be directed toward the Retiree Health Care Fund as compared to FY14. Total recurring General Fund impact will be approximately $30 million with the remaining balance of employer contributions coming from federal, other state funds and internal services funds. Currently an employee earning an annual salary of $40,000 pays $15.39 per pay period and the employer pays $30.77 for a total of $46.16 per pay period. Under the proposal, the same employee will pay $26.93 and the employer will pay $53.85 for a total of $80.78 per pay period. Overall, net take home pay will be reduced by $1.92 each pay period for the first year, $3.84 the second year, $5.76 the third year, $7.69 the fourth year, $9.62 the fifth year and $11.54 the sixth and final year. For every 0.375 increase in employee/employer contributions to the program (as proposed above), the period of time the program is expected to remain solvent will grow between 2 – 3 years while the year the program is expected to deficit spend will be deferred by 1 ‐2 years. The graph below illustrates the impact of the proposed increase over the 6 year period extending the solvency of the program through 2041.

NMRHCA Contribution Increase (Increments for each year of increase)

2043 2038

Year

2033 2028 2023 2018 2013 *3.00

*Current Contribution

3.375

3.75 4.125 4.5 4.875 Total Contribution (Percent of Employee/Employer Payroll)

Deficit Spending

5.25

Solvency

Other Substantive Issues The proposed legislation is a major component of the NMRHCA Five Year Strategic Plan adopted by its board of directors in October 2012, to extend the solvency of the program through 2043. Other major components of the plan include: Phase out “family coverage” subsidies for retirees with multiple dependent children; Increase cost sharing on prescription coverage (stabilize plan/member share percentage); Increase cost‐sharing of pre‐Medicare Plans; Implement graduated minimum age requirement (to receive subsidies); Increase years of service required to receive maximum subsidy (currently 20 years); Reduce pre‐Medicare retiree subsidies; Reduce pre‐Medicare spousal subsidies; Implement enhanced wellness programs All elements of the strategic plan combined will extend the solvency of the NMRHCA program from 2029 through 2043 and more closely align benefits with contributions over the life of the program.

Joint House Education and Senate Education Meeting January 15, 2014 Mark Tyndall, Executive Director

Background History: Retiree Health Care Authority Act  Created July 1990 (no appropriation/prefunding period)  Began paying benefits in January 1991 w/statutory limitations to premium increases until 2008 Current Composition: 300 Public Employers  50% Public Schools  25% State of New Mexico  25% Municipalities Approximately 100,000 active employees 55,361 Covered Retirees (January 1, 2014)  31,718 Medicare / 18,302 Pre-Medicare  5,341 100% retiree pay voluntary plans (e.g. dental/vision)

Current Benefits (20+ years of services: Medicare  BCBS Supplement Plan - $159 per month  Medicare Advantage Plans - $9 - $67 per month Pre-Medicare  BCBS and Presbyterian Monthly Premium Annual Deductible Out‐of‐pocket Limit Urgent Care Emergency Care Prescription (pharmacy) Prescription (mail order)

Premier Premier Plus $ 145.55 $ 272.03 $ 800 $ 300 $ 4,000 $ 3,000 $ 35 $ 30 $ 125 $ 100 $5 ‐ $100 $5 ‐ $100 $12 ‐ $100 $12 ‐ $100

NMRHCA Finances Fiscal Year 2014 (amounts shown in millions)

Sources Employees Employers Retirees Federal Tax Suspense Fund Misc Total

41.6 83.1 100.8 25.9 23.9 6.7 282.0

Uses Health Plan Administration RHCA Operating Medical/Prescription Total

10.9 2.7 236.4 250.0

FY14 Solvency Contribution

32.0

2 27

Program Improvements & Current Events 2007 – Trust Fund exhausted by 2014  Money drawn from fund 4 out of 5 previous years  Unfunded liability (GASB) of $4.1 billion 2014 – Trust Fund to stay positive into 2029  $90 million added to fund over the last 3 years  Unfunded liability of $3.6 billion Cost Management Efficacy  2009 - $417 per member per month  2014 - $418 per member per month (projected) Cost Containment Strategies  Increased deductibles  Increased annual out-of-pocket maximums  Medicare Part B deductible  Percentage of prescription costs paid for by members Revenue Enhancement Strategies  Increase premiums in accordance with medical inflation averaging 8 percent annually  House Bill 27 (prefiled) – increases employee and employer contributions to the program.

3 28

NMRHCA Program Is Manageable – But Significant Challenges Remain 

Recent improvements demonstrate that retiree health benefits can be managed in a responsible way over the long term



Fundamental imbalances will require additional changes over time

NMRHCA Five Year Strategic Plan Positive Fund Balance Through 2043 X

Phase out “family coverage” subsidies for retirees with multiple dependent children

Increase cost sharing on prescription coverage (stabilize plan/member share percentage)

Increase cost-sharing of pre-Medicare Plans Implement graduated minimum age requirement (to receive subsidies)* Increase years of service required to receive maximum subsidy (currently 20 years) Reduce pre-Medicare retiree subsidies Reduce pre-Medicare spousal subsidies Implement enhanced wellness programs (premium incentives for participation/health status) Increase Employee/Employer contribution levels (requires legislative action)

X indicates implementation starting in 2013 *NMRHCA will implement any minimum age requirement adopted by PERA and/or ERB

4 29

House Bill 27  *Increase employee/employer contributions from 3% of payroll to 5.25% over a 6-year period as follows: A B C Fiscal Year Employee Increase FY14 1.00% NA FY15 1.125% 0.125% FY16 1.250% 0.125% FY17 1.375% 0.125% FY18 1.500% 0.125% FY19 1.625% 0.125% FY20 1.750% 0.125%

D Employer 2.000% 2.250% 2.500% 2.750% 3.000% 3.250% 3.500%

E Increase NA 0.250% 0.250% 0.250% 0.250% 0.250% 0.250%

F GF Impact NA $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $5,000,000

G H Total RHCA Revenue NA NA 3.375% $15,000,000 3.750% $30,000,000 4.125% $45,000,000 4.500% $60,000,000 4.875% $75,000,000 5.250% $90,000,000

*Similar proposal endorsed by the Investments and Pensions Oversight Committee increasing employee contributions by the same amount over a 3 year period as compared to the 6 year period indicated above.

5 30

Employee/Employer Impact Employee Impact Example: 

An employee earning $40,000 annually currently pays $15.39 per pay period (1%) which will increase to $26.93 (1.75%) over a 6 year period. Net take-home pay will be reduced each pay period by the following amount in each successive year:



FY15 - $1.92



FY16 - $3.84



FY17 - $5.76



FY18 - $7.69



FY19 - $9.62



FY20 - $11.54

Employer Impact 

Employer Impact Example:



An employer (for each $40,000 employee) currently pays $30.77 (2%) per pay period



Each .25% increase will result in $3.84 increase in contribution.



A 1.5% increase will result in an increased contribution of $600 annually



Each .25% increase in employer contribution will have an approximate $5 million impact on the general fund

6 31

$3,000,000,000

$2,500,000,000

$2,000,000,000

NMRHCA Contribution Increase Increments (Landing Areas) Def. Spend Solvency* Current 2019 2029 Year 1 2020 2031 Year 2 2022 2034 Year 3 2024 2036 Year 4 2025 2038 Year 5 2027 2039 Year 6 2028 2041 *Contributions Only ‐ other elements of five year plan will add additional solvency

$1,500,000,000

$1,000,000,000

$500,000,000

‐$500,000,000 Current

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

7 32

FY15 Legislative Finance Committee/Executive Recommendation Comparison Overall, the FY15 appropriation recommendations proposed by the Legislative Finance Committee and Executive provide for a range of growth between 6.5 and 9 percent for the Healthcare Benefits Administration Program with the Executive recommendation matching our request. The request assumed a 4 percent growth in participation and 5 percent growth in medical trend. In addition, both recommendations provide for one additional FTE; however, the Executive recommendation limits the growth in Program Support to $171 thousand as compared to $224 thousand as recommended by the LFC. The total dollars amounts recommended by each group are shown below in Table 1 (dollar amounts shown in thousands):

Table 1

FY14 Approved Operating

FY15 Request

LFC Exec Recommendation Recommendation

Healthcare Benefits Administration Contractual Services Other Financing Uses Subtotal

$ 255,653.6 $ 278,365.0 $ 272,122.0 $ 278,365.0 $ 2,665.3 $ 2,989.5 $ 2,889.7 $ 2,836.9 $ 258,318.9 $ 281,354.5 $ 275,011.7 $ 281,201.9

Program Support Personal Services & Employee Benefits Contractual Services Other Financing Uses Subtotal

$ 1,712.0 $ 445.2 $ 508.1 $ 2,665.3

Total

$ 260,984.2 $ 284,344.0 $ 277,901.4 $ 284,038.8 FTE

$ 1,966.6 $ 467.4 $ 555.5 $ 2,989.5

$ 1,866.8 $ 467.4 $ 555.5 $ 2,889.7

$ 1,836.5 $ 467.4 $ 533.0 $ 2,836.9

Table 2 (dollar amounts shown in thousands)provides a comparison of the recommended growth in each program which includes a $6.2 million difference in the Healthcare Benefits Administration Program (Exec higher) and a $53 thousand difference in Program Support (LFC higher)

Table 2

FY14 Approved Operating

FY15 Requested Growth

LFC Recommended Growth

Exec Recommended Growth

Healthcare Benefits Administration Contractual Services Other Financing Uses Subtotal

$ 255,653.6 $ 22,711.4 $ 16,468.4 $ 22,711.4 $ 2,665.3 $ 324.2 $ 224.4 $ 171.6 $ 258,318.9 $ 23,035.6 $ 16,692.8 $ 22,883.0

Program Support Personal Services & Employee Benefits Contractual Services Other Financing Uses Subtotal

$ 1,712.0 $ 445.2 $ 508.1 $ 2,665.3

Total

$ 260,984.2 $ 23,359.8 $ 16,917.2 $ 23,054.6 FTE

$ 254.6 $ 22.2 $ 47.4 $ 324.2

$ 154.8 $ 22.2 $ 47.4 $ 224.4

$ 124.5 $ 22.2 $ 24.9 $ 171.6

Ultimately, the budget scenario as recommend by the Executive provides the Retiree Health Care Authority with the greatest ability to accommodate the projected revenues and expenditures for FY15. However, at the conclusion of the presentation before the House Appropriations and Finance Committee – NMRHCA staff indicated our ability to accommodate either budget scenario assuming we continued to maintain our Budget Adjustment Request authority allowing the agency to increase its budget (without limit) in the Healthcare Benefits Administration Program. House Appropriations and Finance Committee Adopted Recommendation On January 15, 2013, the House Appropriations and Finance Committee listened to staff presentations made by Senior Fiscal Analyst, Anne Hanika‐Ortiz and Executive Analyst, Robert McGrail. The presentation included a description of the information summarized above. At the end of the presentation, Representative Salazar asked about House Bill 27 and its effect on our program while Representative Varela asked a few general questions about our request and our authorized BAR authority. In conclusion, the LFC recommendation was adopted by the Investments and Insurance Subcommittee to include the consensus performance measures and targets highlighted below. The committee adoption will be reported to the House Appropriations and Finance Committee on Tuesday, January 28th. FY14 FY15 Budget Request Healthcare Benefits Administration * Output Outcome * Efficiency Efficiency Output Outcome Efficiency Efficiency

Minimum number of years of solvency 15 15 Total revenue generated in millions $275 $282 Total revenue increase to the reserve fund in millions $25.00 $25 Average monthly pre‐medicare eligible per participant claim cost $621 $670 Average monthly medicare eligible per‐participant claim cost $321 $340 Percent of participants satisfied with the healthcare benefits program 85% 85% ±4% ±4% Percent variance of medical premium change with industry average Average number of days to resolve customer service claims 7 7 Percent of average medical premium subsidy for pre‐medicare and Efficiency medicare plans 50% 50% Explanatory Number of retiree healthcare participants 54,000 56,160 Outcome Number of years of projected balanced spending 6 5

FY15 FY15 FY15 LFC Exec Consensus Recomm Recomm Rec 30 $282 $25 $670 $309 85% ±4% 7

15 $282 $25 $670 $340 85% ±4% 6

20 $282 $25 $670 $309 85% ±4% 6

50% 56,160 5

0 85% 100% 99%

0 85% 100% 100%

Program Support Outcome Efficiency Efficiency Efficiency

Number of prior‐year audit findings that recur Satisfaction rating of administrative services provided to all programs Percent of deposits made within twenty‐four hours Percent of payments made within thirty days

0 85% NA NA

0 85% 100% 99%

* Recommended for inclusion in the General Appropriation Act

New Mexico Retiree Health Care Authority Fiscal Year 2014 Second Quarter Review Health Care Benefit Fund As of December 31, 2013, expenditures are $122,001,100 and revenues are $139,518,800 creating a surplus of $17,517,700. As a result, management is projecting revenues in excess of expenditures of $35.2 million in FY14 (up $3.3 million from the 1st quarter projection) based on a similar utilization pattern for hospitals and physicians, growth in membership, migration between health plans and estimated revenues. Notably, the projection for miscellaneous revenues has improved as the payment received from CMS grew to $7 million as compared to approximately $350 thousand for the same time period last year. Claim expenditures through the second quarter of FY14 as compared to the same time frame in FY13 have increased by approximately 5.3 percent. Upward pressures include: 1. The Healthcare Plans have grown by 1,907 members (278 non-Medicare/1,629 Medicare) or 4 percent compared to the same time frame in FY13 2. Claim costs have increased by $6 million or 5.3 percent (1.3 percent medical trend) 3. Participants have begun to meet their deductibles and annual out-of-pocket limits Downward pressures include: 1. Under the pre-Medicare plans - continued migration toward lower premium/higher out-ofpocket costing plans as participation in the Premier Plus Plans shrunk by over 900 members while participation in the Premier Plans grew by nearly 1,200 members. 2. Under the Medicare plans â&#x20AC;&#x201C; Medicare Advantage Plans grew by over 900 members compared to 600 in the supplement plan. 3. Increased cost sharing on the prescription drug plan 4. Limited growth in dependent participation (24 members) Current projections indicate sufficient budget authority exists to cover claim costs through the remainder of FY14. NMRHCA staff will continue to monitor and report revenues and expenditures in order to identify significant changes from projected amounts. Revenues through the second quarter of FY14 have grown by $9.3 million, or 7.2 percent compared to the same time period in FY13. This increase was led by an $8 million, or 15.3 percent increase in retiree premiums (not on a per member basis), $1.1 million growth in transfers from the Taxation and Revenue Suspense Fund and $600 thousand growth in miscellaneous revenue. However, these increases have been partially offset by marginal declines in employer/employee contributions and interest income.

Please note that $2.5 million or 5 percent of the growth in retiree contributions can be attributed to last year’s premium holiday (December 2012) supported by funds received through the Early Retiree Reinsurance Program. In addition, to the 4 percent growth in membership --- retirees are now paying approximately 6 percent more on a per member basis.

Below is a summary of the cash contributions made to the SIC through the first half of FY14:

Transfer Effective August 1, 2013 October 1, 2013 November 1, 2013 Total

Amount Transferred $ 20,000,000 $ 3,500,000 $ 5,500,000 $ 29,000,000

The $20 million transfer made on August 1, 2013, is entirely comprised of revenues earned and received in FY13. Program Support Fund The adjusted operating budget for FY14 is $2,748,300. As of December, 2013, expenditures are $1,279,900 with supporting transfers made from Health Care Benefit Fund. Current projections indicate sufficient budget authority exists to satisfy our financial obligations through the remainder of FY14.

New Mexico Retiree Health Care Authority Second Quarter Budget Review Comparison of Projected vs. Actual Fiscal Year 2014 (in thousands) Healthcare Benefit Fund 2nd Quarter (FY14-FY13 Comparison) FY14 Approved Budget (Half Year) Sources: Employer/Employee Contributions

FY14 Actual

FY13 Actual

% Change

Budget Actuals

$ 52,229.9

$59,866.9

60,243.7

-0.6%

$7,637.1

Retiree Contributions

$ 56,146.3

$60,293.3

52,273.0

15.3%

$4,147.1

Taxation & Revenue Fund

$ 11,965.7

$11,778.8

10,677.5

10.3%

-$186.9

Other Miscellaneous Revenue

8,887.4

$7,579.7

6,949.6

9.1%

-$1,307.7

Interest Income

13.4

$0.1

16.4

-99.4%

-$13.3

Total Sources

$ 129,242.5

$139,518.8

130,160.2

7.2%

$10,276.4

$ 127,826.8

$120,531.4

114,452.9

5.3%

-$7,295.4

Uses: Medical Contractual Services Other Financing Uses/Refunds

1,415.7

$1,469.7

1,342.0

9.5%

$54.1

Total Uses

$ 129,242.5

$122,001.1

115,794.9

5.4%

-$7,241.4

17,517.7

14,365.3

Sources Over Uses

FY14 Approved Budget* Sources: Employer/Employee Contributions

Revenues & Expenditures/Projections % Collected/ Remaining Expended FY14 Actual Balance

Estimated FY14 Total

$ 104,459.7

$59,866.9

44,592.8

57.3%

$ 122,479.1

Retiree Contributions

$ 112,209.5

$60,293.3

51,916.2

53.7%

$ 121,189.5

Taxation & Revenue Fund

$ 23,931.3

$11,778.8

12,152.5

49.2%

$ 23,931.3

Other Miscellaneous Revenue

$ 17,774.7

$7,579.7

10,195.0

42.6%

$ 22,183.0

Interest Income

26.7

$0.1

26.6

0.4%

Total Sources

$ 258,401.9

$139,518.8

118,883.1

54.0%

$ 255,653.6

$120,531.4

135,122.2

47.1%

$ 251,897.3

Uses: Medical Contractual Services

0.2

$289,783.1

Other Financing Uses/Refunds

2,748.3

$1,469.7

1,278.6

53.5%

Total Uses

$ 258,401.9

$122,001.1

136,400.8

47.2%

$ 254,593.0

Sources Over Uses

17,517.7

2,695.7

$ 35,190.1

Budget Adjustment Request (BAR) approved on December 24, 2013 increased the other financing uses category to support projected expenditures from Program Support.

New Mexico Retiree Health Care Authority Second Quarter Healthcare Benefit Fund Detail Fiscal Year 2014 (in thousands) FY14 Actual July 2013 - December 2013 REVENUE: Employer/Employee Contributions

59,866.9

Retiree Contributions

60,293.3

Taxation and Revenue Suspense Fund

11,778.8

Other Miscellaneous Revenue Interest Income TOTAL REVENUE:

7,579.7 0.1 139,518.8

EXPENDITURES: Prescriptions MEDCO Total Prescriptions

35,559.8 35,559.8

Non-Medicare Blue Cross Blue Shield BCBS Administrative Costs Presbyterian Presbyterian Administrative Costs Total Non-Medicare

32,307.4 1,177.9 15,461.0 930.0 49,876.3

Medicare Blue Cross Blue Shield

16,247.4

BCBS Administrative Costs

2,484.3

Presbyterian

1,832.6

Lovelace

1,124.9

Total Medicare

21,689.2

Other Benefits Davis Vision

892.1

Delta Dental

2,829.2

Standard Life Insurance

4,974.3

United Concordia Dental

4,710.6

Total Other Benefits

13,406.2

Other Expenses Program Support Refunds Total Other Expenses TOTAL EXPENDITURES: Total Revenue over Total Expenditures

1,279.9 189.7 1,469.6 122,001.1 17,517.7

New Mexico Retiree Health Care Authority Second Quarter Budget Review Comparison of Budget vs. Actual Fiscal Year 2014 (in thousands) Program Support 2nd Quarter Projections (FY14-FY13 Comparison) FY14 Approved Budget*

FY14 Actual

FY13 Actual

Sources: Other Transfers

$ 1,374.2

1,279.9

1,342.0

(62.1)

-4.6%

Total Sources

$ 1,374.2

1,279.9

1,342.0

(62.1)

6.9%

875.6

864.5

796.2

68.3

8.6%

Contractual Services

222.6

91.2

140.9

(49.7)

Other Costs

276.0

324.2

306.3

17.9

5.8%

Total Uses

$ 1,374.2

1,279.9

1,243.4

36.5

2.9%

Uses: Personal Services and Benefits

$ Change

% Change

-35.3%

Revenue and Expenditure Projections Approved Operating Budget*

FY14 Actuals

Sources: Other Transfers

$ 2,748.3

1,279.9

Total Sources

$ 2,748.3

1,279.9

$ 1,751.1

Contractual Services

445.2

Other Costs

Total Uses

Uses: Personal Services and Benefits

% Collected/ Expended

FY14 Estimated Total

Surplus/ Deficiency

1,468.4

47%

$ 2,680.9

67.4

1,468.4

47%

$ 2,680.9

67.4

864.5

886.6

49%

$ 1,745.4

5.7

91.2

354.0

20%

393.3

51.9

552.0

324.2

227.8

59%

542.2

9.8

$ 2,748.3

1,279.9

1,468.4

47%

$ 2,680.9

67.4

Remaining Balance

Budget Adjustement Request (BAR) approved on December 24, 2013 increased the personal services and employee benefits and other category.

Expenditure Summary (in thousands)

Acct # 200

Account Description Personal Services/ Employee Benefits

300

Contractual Services

400

Other Costs TOTAL

AÂ Â

Approved/ Adjusted Budget

Expended Budget

Remaing Balance

Estimated Expenditures

Projected Balance

1,751.1

864.5

886.6

880.9

5.7

445.2

91.2

354.0

302.1

51.9

552.0 2,748.3

324.2 1,279.9

227.8 1,468.4

218.0 1,401.0

9.8 67.4

Expenditure Detail (in thousands) Personal Services / Employee Benefits

Acct #

Account Description

Approved/ Adjusted Budget

Expended Budget

Remaining Balance

165.9

79.5

86.4

0.0

1,038.5

485.6

552.9

547.6

5.3 0.0

Estimated Expenditures

Projected Balance

520100

Exempt Positions

520300

Classified Perm. Positions

520800

Annual & Comp Paid

0.0

521100

Group Insurance Premium

151.6

71.0

80.6

0.0

521200

Retirement Contributions

198.5

93.3

105.2

0.0

90.2

41.3

48.9

48.5

0.4

0.5

0.0

521300

FICA

521400

Worker Comp

521410

GSD Work Comp Ins

3.0

0.0

521500

Unemployment Comp

12.1

0.0

521600

Employee Liability Insurance

66.9

0.0

521700

Retiree Health Care

23.9

11.3

12.6

0.0

521900

Other Employee Benefits

0.0

1,751.1

864.5

886.6

880.9

5.7

Approved/ Adjusted Budget

Expended Budget

Remaining Balance

TOTAL

Contractual Services

Acct #

Account Description

Estimated Expenditures

535200

Professional Services

250.0

47.7

202.3

192.3

535300

Other Services

22.5

7.9

14.6

6.4

535400

Audit Services

44.0

26.0

18.0

19.3

Projected Balance 10.0 8.2 (1.3)

535500

Attorney Services

75.0

6.9

68.1

33.1

535600

Information Technology Services

53.7

2.7

51.0

0.0

445.2

91.2

354.0

302.1

51.9

Approved/ Adjusted Budget

Expended Budget

Remaining Balance

TOTAL

35.0

Other Costs

Acct #

Account Description

Estimated Expenditures

Budget Balance

542100

Employee In-State Mileage & Fares

5.0

1.7

3.3

2.3

1.0

542200

Employee In-State Meals & Lodging

4.5

1.9

2.6

0.0

542300

Board & Commission - In-State

33.0

10.2

22.8

4.8

18.0

542500

Transportation-Fuel & Oil

2.0

0.5

1.5

0.5

1.0

542600

Transportation

0.1

0.0

0.1

0.0

542700

Transportation - Insurance

0.3

0.0

0.3

0.0

542800

State Transportation Pool Charges

7.0

1.8

5.2

2.5

2.7

543100

Maintenance - Grounds & Roadways

543200

Maintenance - Furniture, Fixtures & Equipment

0.0

0.1

(0.1)

0.0

(0.1)

13.0

5.1

7.9

1.9

543300

6.0

Maintenance - Building & Structure

7.0

0.0

7.0

0.0

7.0

543400

Maintenance - Property Insurance

3.0

1.9

1.1

0.9

0.2

543500

Maintenance - Services

0.0

543700

Maintenance Services

0.8

0.0

0.8

0.0

0.8

543820

Maintenance IT

2.0

0.0

2.0

0.0

544000

Supply Inventory IT

20.0

3.1

16.9

1.9

15.0

544100

Supplies - Office Supplies

10.0

3.8

544900

Supplies - Inventory Exempt

6.0

21.7

545700

DoIT - ISD Services

2.8

0.9

1.9

0.0

545701

DoIT - HCM Fees

7.0

8.7

(1.7)

0.0

(1.7)

545900

Printing & Photo. Services

47.0

36.4

10.6

12.6

(2.0)

546100

Postage & Mail Services

92.8

73.1

19.7

19.3

0.4

546400

Rent of Land & Buildings

145.0

85.9

59.1

63.0

(3.9)

546500

Rent of Equipment

38.0

26.9

11.1

30.6

(19.5)

546600

Telecomm

87.2

36.0

51.2

58.8

(7.6)

546700

Subscriptions & Dues

2.0

1.5

0.5

546800

Employee Training & Edu.

6.5

1.5

5.0

2.0

3.0

546801

Board Member Training

1.0

0.0

1.0

0.0

546900

Advertising

2.0

0.0

2.0

1.0

547900

Miscellaneous Expense

2.0

0.3

1.7

1.3

0.4

547999

Request to Pay Prior Year

0.0

548300

Information Technology Equipment

0.0

549600

Employee Out-Of-State Mileage & Fares

0.0

549700

Employee Out-Of-State Meals & Lodging

1.0

0.0

1.0

0.2

0.8

549800

B&C-Out-Of-State Mileage & Fares

2.0

0.1

1.9

0.0

549900

B&C- Out-Of-State Meals & Lodging TOTAL

6.2 (15.7)

3.2

3.0

0.0

(15.7)

0.0

2.0

1.1

0.9

0.0

552.0

324.2

227.8

218.0

9.8

NEW MEXICO RETIREE HEALTH CARE AUTHORITY CHANGE IN NET ASSET VALUE FOR THE MONTH ENDED DECEMBER 31, 2013 Large Cap Active Market Value

November 30, 2013

Core Bonds

$48,758,446.93

Large Cap Index

$106,900,627.61

Non U.S. Developed

$47,679,751.86

$51,204,375.19

Non U.S. Emerging

Mid/Small Cap

Total

$36,680,729.73

$39,329,893.99

$330,553,825.31

Prior Month Adjustment

0.00

Contributions

0.00

Distributions/Withdrawals

0.00

Fees

0.00

60,712.12

337,265.87

58,781.81

35,592.07

43,765.38

536,024.98

1,283,605.86

698,143.20

(487,764.22)

1,324,919.90

3,204,812.93

$48,963,265.45

$51,961,300.21

$40,698,579.27

$334,294,663.21

Income Earned Capital Appreciation/Depreciation

December 31, 2013

$50,056,612.73

(851,545.51)

$106,386,347.97

$36,228,557.58

New Mexico Retiree Health Care Authority Market Value of Investment Fiscal Year 2014 $350,000,000 $315,000,000 $280,000,000 $245,000,000 $210,000,000 $175,000,000 $140,000,000 $105,000,000 $70,000,000 $35,000,000

Core Bonds

Large Cap Index

Non US Developed

Emerging Markets

30-Jun-14

31-May-14

30-Apr-14

31-Mar-14

28-Feb-14

31-Jan-14

31-Dec-13

30-Nov-13

31-Oct-13

30-Sep-13

31-Aug-13

$0 31-Jul-13

Market Value

1,237,453.69

(92.27)

Mid/Small Cap